INMA_A01.QXD

The implication is that there was insufficient revenue from
ad sales on iVillage and insufficient opportunities to pro-
mote Tesco.com sales. However, iVillage was a useful
learning experience in that there are some parallels with
iVillage, such as message boards and community advisers.
Wade-Gery is also director of Tesco Mobile, the joint
‘pay-as-you-go’ venture with O 2 which is mainly serviced
online, although promoted in-store and via direct mail.
Tesco also offers broadband and dial-up ISP services, but
believe the market for Internet telephony (provided
through Skype and Vonage, for example) is not sufficiently
developed. Tesco.com has concentrated on more tradi-
tional services which have the demand, for example,
Tesco Telecom fixed-line services attracted over a million
customers in their first year.
However, this is not to say that Tesco.com will not
invest in relatively new services. In November 2004, Tesco
introduced a music download service and just six months
later, Wade-Gery estimates they have around 10% market
share – one of the benefits of launching relatively early.
Again, there is synergy, this time with hardware sales. NMA
(2005) reported that as MP3 players were unwrapped,
sales went up – even on Christmas Day! She says:

The exciting thing about digital is where you can take it

in the future. As the technology grows, we’ll be able to

turn Tesco.com into a digital download store of all

sorts, rather than just music. Clearly, film [through video

on demand] would be next.

But it has to be based firmly on analysis of customer

demand. She says:

The number one thing for us is whether the product is

something that customers are saying they want, has it

reached a point where mass-market customers are

interested?

There also has to be scope for simplification. NMA (2005)

notes that Tesco is built on a core premise of convenience

and value and Wade-Gery believes what it’s already done

with mobile tariffs, broadband packages and music down-

loads are good examples of the retailer’s knack for

streamlining propositions. She says:

‘We’ve actually managed to get people joining broad-

band who have never even had a dial-up service’.

Sources: Humby and Hunt (2003), NMA (2005), Hitwise (2005), Wikipedia

(2005)

Question

Based on the case study and your own research on

competitors, summarise the strategic approaches

which have helped Tesco.com achieve success online.

Summary

Summary

1 The development of the online presence follows stage models from basic static

‘brochureware’ sites through simple interactive sites with query facilities to dynamic

sites offering personalisation of services for customers.

2 The Internet marketing strategy should follow a similar form to a traditional strategic

marketing planning process and should include:

goal setting;

situation review;

strategy formulation;

resource allocation and monitoring.

A feedback loop should be established to ensure the site is monitored and modifica-

tions are fed back into the strategy development.

3 Strategic goal setting should involve:

setting business objectives that the Internet can help achieve;

assessing and stating the contribution that the Internet will make to the business

in the future, both as a proportion of revenue and in terms of whether the Internet

will complement or replace other media;

stating the full range of business benefits that are sought, such as improved corpo-

rate image, cost reduction, more leads and sales, and improved customer service.